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This chapter discusses the main weaknesses and strengths of Brazilian financial markets. Low credit ratios, high intermediation costs, and financial exclusion contrast with the expansion of the institutional investor base, including pension and mutual funds. On-going policy efforts, including the reform of bankruptcy legislation, improvements in credit information, and the expansion of micro-finance, are important steps forward. The challenge of improving the investment climate can be met by facilitating access to credit and reducing intermediation costs. Additional measures would include the paced phasing out of directed credits to agriculture and housing, the gradual alleviation of the tax burden on financial intermediation, and the continued strengthening of the credit information industry.